Adveq buys into Australia’s king of crops

While market leader California has seen its share fall in recent years, Australia is on the way up, with young plantations due to reach maturity in the next four years.

It is four years since Adveq identified almonds a priority for its real assets portfolio. Last week, the Swiss fund-of-funds completed the purchase of 18,000 hectares of orchards in Australia for A$211 million ($200 million) from Olam International, a commodities conglomerate backed by Singapore's Temasek Holdings.

"Demand for almonds is increasing consistently, partly because a lot of countries, especially in Asia, now regard them as healthy snacks," says Gaia Arnaboldi, executive director at Adveq Real Assets. "At the same time, the supply of arable land suitable for orchards is limited. A unique combination of terrain, soil, water access and temperature is needed."

The orchards, located in Victoria and operated by Olam Australia, a subsidiary of Olam International, provide the required nurturing environment - cold winters and hot summers with little rain during the harvest period between February and April. They account for approximately 50% of Australian almond output and 3.5% of the global total.

The investment was led by the Adveq Real Assets Harvested Resources Fund, which is currently in the market and seeking to raise up to $300 million. Other participants include Municipal Employees' Retirement System (MERS) of Michigan and Denmark's Danica Pension from Denmark.

The Laguna Bay Pastoral Company, an Australian fund manager that specializes in agriculture, will manage the local holding structure, Adveq Almond Trust.

"This investment ticks every box we are looking at in terms of diversification, long term inflation hedge, and sustainable returns," Arnaboldi adds.

Of the 18,000 hectare plot, 12,000 hectares are currently planted with 3 million trees. The asset will be rented back to Olam Australia for an 18-year period. Olam International claims to be the world's second-largest almond grower.

"The orchard investment is the first transaction on our real asset platform. This is one of 10 agriculture deals in the pipeline - some will be orchards, others feed producers," says Berry Polmann, also an executive director at Adveq Real Assets. "There is an increasing demand for meat, so we want to have these types of investment as well."

About one third of the fund will be deployed in the Asia Pacific region.

Adveq has moved into real assets space in the last five years and currently manages two other funds in the space, covering oil and gas and power generation, respectively.

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• Topics
• Industrials
• Australasia
• Buyouts
• Agriculture
• Adveq Management AG
• Real assets
• Australia
• buyout